Is This 8.5% Yield Sustainable?

Fidus Investment's special dividend is in trouble. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ 

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View in browser SPONSORED RIP Green New Deal? A nuclear breakthrough is taking the world by storm... One company just signed an energy deal with the U.K. for $5 billion in annual revenue through 2050 (and 40,000 jobs). This $1 stock could soon surge 10X in just five years. Get the Details BEFORE an August Announcement Makes Wall Street Catch On SAFETY NET Is This 8.5% Yield Sustainable? Depends How You Look at It Marc Lichtenfeld, Chief Income Strategist, The Oxford Club Fidus Investment (Nasdaq: FDUS) is an under-the-radar business development company (BDC) that yields more than 8%. The Evanston, Illinois-based company provides debt and equity financing to American companies that need cash for acquisitions or recapitalization. Its portfolio includes... $39 million in debt and equity in insulation manufacturer GreenFiber $55 million in debt and equity in FDS Avionics, which makes high-definition displays for airplanes $18 million in debt, equity, warrants and preferred stock in human resources software company Acendre Midco. Fidus' quarterly dividend is $0.41, which gives the stock an 8.5% yield. But it also often pays special dividends. For example, in the second quarter, Fidus paid investors an additional $0.29 per share. In the first quarter, shareholders received an extra $0.25 per share. To determine the safety of a company's dividend, I look at both the regular quarterly dividend and the total dividend, including special payments. SPONSORED The No. 1 rebound stock of 2023? One of the most talked-about stocks of 2023 is set to take off any day. You can grab shares for less than $5... But likely not for long. Find out why. As far as the quarterly dividend goes, in 2022, the company paid out $1.44 per share. At the end of the year, there were 24.5 million shares outstanding, which means Fidus paid out approximately $35.3 million in quarterly dividends. It generated $46.5 million in net investment income for the year, giving it a payout ratio of 76%. I'm generally comfortable with BDCs paying out all of their net investment income in dividends. But not more than 100%. This year, the quarterly dividend has increased to $0.41 per share. There were 24.8 million shares outstanding as of the end of the first quarter, which means Fidus will pay shareholders about $40.7 million. There are no net investment income estimates for this year, but earnings and revenue are projected to grow 25%, so we'll assume net investment income is going to rise also. Even if net investment income grows only 10%, that should be plenty to ensure that the quarterly dividend can continue to be paid. However, when you consider all of the dividends the company will pay, the picture isn't quite as pretty... Get the full analysis of Fidus' dividend safety by clicking the button below. CAN YOU PUT YOUR FAITH IN FIDUS? RECOMMENDED LINKS Alexander Green Just Discovered a Little-Known Stock That He Believes Could Be the "Next Great American Super Stock," Following in the Footsteps of Legendary Stocks Like Lululemon, Amazon and Green Mountain Coffee. (Click Here for Details on This Rare Find.) Marc Lichtenfeld Called the 2022 Boom in Oil Stocks... Now He Says Something Even Bigger Is Coming. Click Here to Find Out More. MORE FROM WEALTHY RETIREMENT The AI Stocks Most Likely to Survive the Bubble Bryan Bottarelli's Real-Life Tales From the CBOE Quality Growth Company Meets Value With IBKR Stock Two Harbors Stock: Will Investors Get Shipwrecked? 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